Changing office environments to boost Salt Lake City

Salt Lake City's commercial market is expected to fare well this year.

Like much of the rest of the country, commercial real estate in Utah's capital and largest city ended 2013 on a high note and is expected to continue gaining momentum throughout 2014.

One factor that is increasing market activity is companies' focus on workplace strategies as they look to make more efficient use of space. Some businesses are turning to commercial real estate companies to revamp their offices to accommodate millennials, who are accustomed to collaboration, teamwork and even perks, such as game rooms and other large spaces to be used for meetings or even just normal work.

"These strategies focus on overall office environment promoting creativity, collaboration and efficient usage of space," Eric Smith, CBRE first vice president, said to the Deseret News. "The millennial workforce is growing, and as this segment grows, so does the demand for more flexible space."

As Salt Lake City companies are putting more work into their interiors, rents per square feet have jumped from $20.07 per square foot in the third quarter of 2013 to $20.09 in the fourth quarter. The Deseret News added that the average lease rate is up 2 percent.

One such landlord, The Boyer Company, recently made an effort to improve its I-80 Corporate Center, and those efforts paid off. As of last week, the 61,000-square-foot building is now 100 percent occupied.

"There is a great takeaway here," said Tab Cornelison, senior vice president of The Boyer Company. "That takeaway is that renovations pay off. When building owners take the time to tailor space to meet the needs of the market, they get results."

Industrial in on the act
Salt Lake City's office market may be growing, but so is the industrial sector, which has expanded by more than 7 million square feet since 2009. Lease rates also are increasing, ending 2014 at 41 cents per square foot, which is more than pre-recession levels.

"This activity indicates that new development can be expected in the immediate future," CBRE Senior Vice President Rad Dye said to the Deseret News. "Salt Lake County is an attractive location for all types of industrial operations, (offering) low energy, land and labor costs. These factors, coupled with our strong economy, are attracting a great deal of new users to the market."

To that end, 1.4 million square feet of construction were completed in 2013, 70 percent of which was pre-leased, evidence that companies are clamoring for new spaces that increase inventory. The newspaper reported that there are 1.1 million square feet of commercial space under construction right now.

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